Naver Webtoon’s sales up thanks to AI-powered recommendations

Customized comic sorting screen on Naver Webtoon. It displays works of similar genres based on users’ viewing history, focusing on those who enjoy horror content. (Naver Webtoon)

Naver Webtoon, a webtoon platform owned by South Korea’s internet giant Naver Corp., is leveraging artificial intelligence (AI) to enhance its personalized comic recommendation services and encourage dedicated users to spend more.

The company is also boosting profitability by introducing paid AI services, such as chatting with webtoon characters and other applications of webtoon intellectual property (IP).

According to Naver Webtoon on Sunday, the monthly average revenue per paying user (ARPPU) totaled $8.25 for the July to September 2024 period in Korea, up 8.8 percent from $7.58 during the same period the year before.

The increase in individual user spending offset some of the revenue losses, given that the number of monthly paying users (MPUs) dropped from 4.2 million to 3.9 million during the same period and overall revenue from paid content declined by 5.5 percent.

The surge in spending by paying users is attributed to Naver Webtoon’s AI-powered comic recommendation service that was introduced in June 2024. This service curates comics based on the user’s viewing history, arranging them in an order they are likely to enjoy. Frequently viewed comics appear at the top, while new comics tailored to the user’s preferences are strategically placed among their regular reads.

Naver Webtoon currently hosts a staggering 699 serialized works. While comics were traditionally sorted by popularity or update order, the sheer volume led many users to stick to familiar titles but this behavior has gradually diminished since the introduction of the tailored service. The number of titles read weekly per user in Korea increased by 3 percent on year during the third quarter of 2024, as users began exploring new recommendations alongside their regular reads.

A similar AI recommendation system contributed significantly to Naver Webtoon’s record-breaking revenue in Japan during the third quarter of 2024, with monthly paying users reaching a record high, or a 25 percent on-year increase.

Naver Webtoon also launched Character Chat, a partially paid service allowing users to interact with webtoon characters that is powered by Naver’s AI model HyperCLOVA X, in June 2024. It then introduced a paid service called Webtoon Caricature where users upload photos to receive caricatures in the style of webtoon artists, a month later.

The Character Chat service has garnered immense popularity, surpassing 1.35 million users and generating 25 million AI-driven conversations.

The AI-driven initiatives are part of Naver Webtoon’s strategy to overcome challenges in Korea’s declining webtoon market. According to the Korea Creative Content Agency’s 2023 survey, the percentage of respondents who read webtoons at least once a week fell from 69 percent in 2022 to 62.8 percent in 2023. Spending on webtoons has also decreased, with the most common expenditure shifting from 5,000 won to 10,000 won ($3.6 to $7.2) in 2022 to 1,000 won to 3,000 won in 2023.

“We are also exploring projects to create new content formats, such as transforming webtoons into short-form videos using AI,” a Naver official said.